Compared to other parts of the world, the EU on the whole has been fairly reluctant to embrace digital economic innovation. The bloc has been suspicious of cryptocurrencies, and treated them as a potential threat to a financial system where stability is paramount.
But the first half of 2026 has been full of clear risks to that stability. Wars, tariffs and shaky military alliances have changed everything.
Nato has been undermined, spending priorities have changed, and trading relationships are not as solid as they used to be. As the former Italian prime minister (and former president of the European Central Bank) Mario Draghi, recently remarked: “For the first time in living memory, [the EU is] truly alone together.”
So perhaps now is the time for the EU to grab hold of some important economic innovations – and stop being so dependent on the US.
One step towards digital economic sovereignty could involve the European Central Bank (ECB) issuing the digital euro sooner than planned (it’s currently due to land in 2029). Like the digital pound being considered in the UK, a digital euro would function as public money in digital form, complementing – not replacing – physical cash. It would be backed by the ECB and usable for everyday payments across the euro zone.
A digital euro would be used by consumers and small firms every day, and is a project which has been studied by the ECB since 2020. In China, the digital yuan is already in wide circulation.
A second step could be to modernise banking infrastructure so that European (rather than US) stablecoins could be more widely used for making payments in euros.
At the moment, almost all of the world’s stablecoins (a type of cryptocurrency designed to maintain a stable value) are pegged to US government bonds. Europe should focus on creating the financial and regulatory conditions for stablecoins backed by euro bonds to run into a European digital infrastructure.
The point of a European stablecoin would be to help European firms trade more efficiently – stablecoins can be faster and cheaper than traditional fiat currencies (which are government issued). Similarly, the digital euro would aim to make retail and household payments more secure and more efficient.
Both moves would help to challenge the US dollar’s dominance when it comes to global financial transactions. And there are some very good reasons why Europe should strongly consider doing just that.
First, the EU urgently needs to prepare for the possibility that at some point, somebody in the US may consider withholding European access to the the likes of Visa, Mastercard and American Express – the systems which Europeans use to make millions of payments every day.
As a sanction, this would be extreme – but by no means impossible. It has already been imposed on some judges at the International Criminal Court who made decisions which were not liked in Washington.
Pay your own way
Another good reason to build an EU-centred payment system is that it brings autonomy for the future. For instance, Europe may become less happy about accepting a dollar-dominated trade system where Europe ends up financing the US deficit by using dollars for international transactions. Instead, it may seek to promote the euro as part of a new multi-currrency financial order.
The two innovations – European stablecoins and a digital euro – could also create an area of the global economy where Europe manages to gain a competitive advantage by looking for a third way between the US and China.
For in the US, a digital dollar issued by the FED is about to be banned by Donald Trump, partly due to concerns over privacy. And in China, national stablecoins are to be prohibited so as not to jeopardise the monopoly of the central bank.
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It’s possible then, that a successful euro-pegged stablecoin market could increase international use of the euro, while also reducing the EU’s reliance on US payment systems.
Overall then, the need for stability in an increasingly unstable global economy, may be the trigger for Europe to finally embrace change. The bloc may come to view digital currencies as a vital part of its strategic infrastructure, similar to energy networks, telecommunications systems or defence capabilities.
At the very least, it should stop seeing them as a risk – and start treating them as a tool that could help to bring economic and geopolitical resilience.
